Wednesday, May 17, 2017

Kentucky Judge pleads guilty to half a billion dollar Social Security Disability fraud, partner with Kentucky lawyer. Government officials testify they have no idea how much disability fraud exists nor if payments known to be illegal have been stopped-Washington Times

David B. Daugherty,
a former administrative law judge, approved at least 3,149 disability
cases filed by a single lawyer in eastern Kentucky. More than 1,700 of
those have been deemed fraudulent by government investigators,
obligating the government to pay out more than $550 million in lifetime
benefits.

Daugherty
pleaded guilty to two counts of receiving illegal gratuities. The
charge is similar to bribery, though the payoff is made after the fact,
not before.

“This admission that
a judge in a position of trust took over a half-million dollars in cash
from a crooked lawyer is outrageous,” said Rep. Sam Johnson, chairman
of the House Ways and Means subcommittee that oversees the program.
“This case proves once again that more needs to be done to stop
disability fraud across America. I’m committed to working with my
colleagues to help protect taxpayer dollars and prevent disability
fraud.”

Disability fraud appears to be growing, with some of the biggest scams being detected in recent years. But the one Daugherty was involved in was staggering in its brazenness.

Daugherty would make a point of assigning himself cases filed by Eric C. Conn, a
lawyer who dubbed himself “Mr. Social Security” and whose ads promising
to win disability benefits for the downtrodden were legendary in eastern
Kentucky.

Daugherty
instructed Conn on how to write up bogus applications so he could
approve them without ever needing to have the applicants appear for an
in-person hearing, according to court documents, speeding the process
along.

Conn, who pleaded guilty earlier this year, admitted he
submitted false IQ tests andhad the doctors rubber stamp bogus medical
diagnoses for many of his clients.

Federal prosecutors said rejections of bad applications, if they ever happened, were rare.

Conn
collected more than $7 million in payments for filing bogus
applications while the scam was operating from 2004 to 2011, and paid Daugherty $609,000 during that time.

They
would meet in the parking lot of a restaurant or gas station so Conn
could hand over the cash, which was carefully structured to keep just
under the level that might draw attention from financial regulators,
according to court documents.

At a rate of nearly $100,000, Daugherty
was adding a tremendous supplement to his annual pay as an
administrative law judge. In 2004 they averaged $137,000 a year, rising
to $155,000 in 2011, according to FederalPay.org.

Conn, in his case, had said Daugherty
was the orchestrator, with the administrative law judge first
approaching the lawyer and making clear he had an extraordinary amount
of power over Conn’s cases.

Conn’s plea agreement said Daugherty
suggested an initial $5,000 payment, which he said was to help a
relative in rehab. The two men later worked out an arrangement to pay
for each approved application.

Sean
Brune, assistant deputy commissioner at the Social Security
Administration’s budget office, also said during last month’s hearing
that his agency doesn’t have the power to strip Daugherty of his government pension.

“We do not have under current statute authority to revoke his pension,” he said.

Still,
Mr. Brune said that if the former judge is convicted the court can order
restitution, meaning his pension could be garnished to cover those
costs.

Rep. Tom Rice, a South Carolina Republican who said the
former judge is now living in his district in Myrtle Beach, asked if
Congress should pass a law to cancel pensions of Social Security
employees who abet fraud.